Obama debates over tax cuts

In a discussion that mirrored the Democrats’ split in Congress, President Barack Obama debated two members of his economic recovery board over middle-class tax cuts Monday, swatting down arguments that the richest Americans need the same relief.

At a meeting of the President’s Economic Recovery Advisory Board, Obama took on resistance from former Securities and Exchange Commission Chairman William Donaldson and Harvard economic professor Martin Feldstein, who said that if the tax cuts aren’t given to everyone, economic instability would persist. The president stood firm on his view that extending the breaks for families making less than $250,000 would benefit 98 percent of Americans, while providing them to the richest 2 percent would cost $700 billion.

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“I don’t know any economists — including, I think, Martin — who think we are likely to get a bump in aggregate demand from $700 billion of borrowed money going to people like those of us around the table, who, if I suspect want a flat-screen TV, can afford one right now and are going out and buying one,” he said. “If we were going to spend $700 billion, it seems, we’d be wiser having that $700 billion going to folks who would spend that right away.”

In recent weeks, Obama has pushed Congress to extend the soon-to-expire Bush-era tax cuts for the middle class, a move that he said would help stimulate the economy and, in turn, create jobs. He has also framed it as a midterm campaign issue, suggesting that Republicans — who want the tax-cut extension to include the nation’s top earners — want to help the wealthy.

But some moderate Democrats — backed by Peter Orszag, Obama’s former budget director — believe the extension should include the affluent, at least temporarily. Congress adjourned last week without taking up the issue.

“It was a robust discussion,” Obama told reporters at the conclusion of the meeting.